Productivity Growth, Knowledge Flows, and Spillovers

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This paper explores the role of knowledge flows and productivity growth by linking direct survey data on knowledge flows to firm-level data on TFP growth. Our data measure the information flows often considered important, especially by policy-makers, such as from within the firm and from suppliers, customers, and competitors. We examine (a) what are the empirically important sources of knowledge flows? (b) to what extent do such flows contribute to TFP growth? (c) do such flows constitute a spillover of free knowledge? (d) how do such flows correspond to suggested spillover sources, such as multinational or R&D presence? We find that: (a) the main sources of knowledge are competitors; suppliers; and plants that belong to the same business group ; (b) these three flows together account for about 50% of TFP growth; (c) the main "free" information flow spillover is from competitors; and (d) multinational presence contributes to this spillover.

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